CAG: Five telcos understated revenue resulting in loss of over Rs 2,500 crore

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New Delhi | Published: December 20, 2017 5:21:10 AM

The government auditor said “audit indicated total understatement of AGR of Rs 14,813.97 crore for the period up to 2014-15 and a consequent short payment of revenue share to the government of Rs 1,526.70 crore.

The findings form part of the CAG’s latest report on telecom, which was tabled in Parliament on Tuesday.

The Comptroller and Auditor General of India (CAG) in its latest report has said five telecom operators, including Tata Teleservices, Telenor and Reliance Jio, understated adjusted gross revenue (AGR) of more than Rs 14,800 crore thereby leading to a loss of Rs 2,578 crore to the government exchequer during FY07 to FY15. The government auditor said “audit indicated total understatement of AGR of Rs 14,813.97 crore for the period up to 2014-15 and a consequent short payment of revenue share to the government of Rs 1,526.70 crore. The interest due on the short paid revenue share, for the period up to March 2016 was Rs 1,052.13 crore”. The findings form part of the CAG’s latest report on telecom, which was tabled in Parliament on Tuesday. The report covers audit findings on revenue share of Tata Teleservices and Tata Teleservices (Maharashtra) from FY10 to FY15, Quadrant Televentures during FY07 to FY15, Videocon Telecommunication for FY10 to FY15, Telenor during FY10 to FY15 and Reliance Jio for FY13 to FY15. “Audit observed non-compliance to the licence conditions leading to short payment of revenue share to the government,” the auditor observed. CAG report points out that this understatement in gross revenue (GR) and AGR was done by adjusting the amount paid as commission or discount to distributors, dealers, agents, etc; promotional free airtime schemes; discounts given to postpaid subscribers; revenue from infra sharing; roaming revenue netted off by discount given to other operators; non-inclusion of foreign exchange gain; Non/short inclusion of interest income and dividend income among others.

It observed that the government’s collection in terms of spectrum usage charge (SUC), licence fee (LF) and interest was short by Rs 1,893.60 crore from Tata Teleservices, while in the case of Telenor it was Rs 603.75 crore. It also said the revenue from Videocon was short by Rs 48.08 crore and from Quadrant by Rs 26.62 crore. The CAG report said Reliance Jio was short by Rs 6.78 crore. The Reliance Industries telecom arm began commercial services in September 2016. On the issue, a Jio spokesperson said, “The charge on Reliance Jio is related to revenue share on realised forex gain.” “This is an industry issue and was referred to TDSAT, which ruled in favour of telcos. However, the TDSAT decision was appealed against by the DoT and this matter is currently subjudice with the Supreme Court.” The DoT will now analyse the issue and will accordingly ask operators to respond. Telcos pay LF and SUC at a percentage of AGR every quarter on a self-assessment basis to the government. Industry insiders say that there is a difference of opinion between the CAG and the telecom operators on the definition and measurement of the AGR. The issue of AGR has been in the courts and tribunal TDSAT on various occasions in the past 15 years.

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